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Make room Juan Valdez: Starbucks opens in Colombia

Joshua Goodman Associated Press

Posted:
07/16/2014 04:12:03 PM CDT

Updated:
07/16/2014 04:12:03 PM CDT

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A Starbucks employee demonstrates the preparation of a cup of coffee during a media tour of the new shop in Bogota, Colombia, Wednesday, July 16, 2014. The three-floor coffee house in Bogota is the first of 50 that the Seattle-based company plans to open here in the next five years. (AP Photo/Fernando Vergara)

On Wednesday, Starbucks made its much-anticipated debut in the country synonymous with coffee after decades of roasting Colombia's Arabica beans for billions of java lovers the world over.

The three-floor coffee house in Bogota is the first of 50 that the Seattle-based company plans to open here in the next five years. In a nod to the country's proud coffee-growing tradition, it's also the only one in the world to serve exclusively locally-sourced coffee.

But will Colombians answer Starbucks' siren call and ditch a popular local chain bearing the bushy-whiskered coffee farmer's name?

Colombia's coffee federation, owner of the Juan Valdez chain, is outwardly welcoming the competition. It says the arrival of Starbucks will boost the market for gourmet java even if sales at its nearly 200 stores in Colombia take a hit over the short term.

"There's room in the market for us both," said Alejandra Londono, head of international sales for the Colombian chain.

Juan Valdez's social mission promoting Colombian coffee and contributing to producers' welfare is likely to keep customers loyal, said Londono.

Since its founding 11 years ago, the Colombian chain has funneled more than $20 million to a national fund that supports the country's 560,000 coffee-growing families, some of whom also own shares in the company.

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While Starbucks also has burnished its image for corporate responsibility, offering employees in the U.S. generous health care benefits and now online college courses, it's stayed clear of Colombia, Latin America's third largest economy, even as it has opened more than 700 stories in 12 other countries in the region. That may have been because it feared trampling on local sensibilities already hurt by the branding of coffee that leaves growers earning just a few pennies from every $4 venti latte sold.

"Given the dependence we have on Colombian coffee farmers we wanted to tread very lightly over the years," CEO Howard Schultz said in an interview in Bogota. So "when we did decide to come we wanted to do it in a way that was very respectful and through the lens of humility."

A desire to overcome the commodities curse is also what's been driving the federation's focus on adding value up the retail chain, a strategy reflected in more sophisticated local coffee-drinking culture.

While known for exporting the world's finest beans, until recently Colombians' taste in coffee was quite provincial, relegated to a preference for heavily-sweetened, warmed-over black coffee known as tinto, which is sold nearly everywhere.

Starbucks has also helped Colombian growers, introducing to consumers about 15 years ago a single-origin coffee grown in the Narino mountains.

Schultz, who first traveled to Colombia around 15 years ago to purchase beans, said no expense was spared to make the Colombia launch a success. For the first time in Latin America its coffee is being roasted locally, the store is decorated with mostly Colombian artwork and the company opened a farmer support center in the coffee hub of Manizales to share insights with growers.

"This is all designed to create a spotlight, halo and celebration of Colombian coffee," said Schultz.

Across from where Starbucks opened on a leafy park in north Bogota, office workers at a rival Juan Valdez seemed thrilled with the prospect of having a new option for their late-afternoon caffeine fix. Service at their local coffee house, they said, has been improving ever since Starbucks announced it was coming a year ago.

"I like Juan Valdez but it doesn't mean I'll never go to Starbucks just because I want to support our own," said Marcela Gomez, an architect. "A little healthy competition is good."